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Peak Oil Is Almost Here and There’s No Magic To Counter It: Interview with Dave Summers

This where we stand, and it’s a fairly bleak view: Peak oil is almost here, and nothing new (with the possible but unlikely exception of Iraq) is coming online anytime soon and while the clock is ticking – forward movement on developing renewable energy resources has been sadly inadequate. In the meantime, the idea that shale reservoirs will lead the US to energy independence will soon enough be recognized as unrealistic hype. There are no easy solutions, no viable quick fixes, and no magic fluids. Yet the future isn’t all doom and gloom – certain energy technologies do show promise. We had a chance to speak with well known energy expert Dave Summers where we cut through the media noise and take a realistic look at what our energy future holds.

Dr. Dave Summers – scientist, prolific writer and author of Waterjetting Technology, is the co-founder of The Oil Drum and currently writes at the popular energy blog Bit Tooth Energy. From a family of nine generations of coal miners, Summers’ patented waterjetting technology enables the high-speed drilling of small holes through the earth among other applications.

James Stafford:What do you foresee in our energy future? Will new extraction techniques and advances in drilling technology help put peak oil off?

Dave Summers: Most of the “innovation” in energy extraction from underground has been known for some time. It’s just taken time to work its way through to large-scale market use. There are techniques such as in-situ combustion, whether of coal or oil sand, that are now being developed that show some promise. But each increment of gain is at higher cost, and is chasing after a smaller target volume. Even if better methods of drilling were developed (and we have looked at several) in the cost of overall production this would not, in itself, provide that much benefit.

If ways could be found to economically release more hydrocarbon from existing and drilled reservoirs then this might have a significant impact, but though this has been sought after with lots of effort, there has been no magic fluid or way of doing that yet.

Peak oil is about here, though we can argue about fractions of a million barrels of day, it is hard to find any large volumes that can be expected to come onto the market in the next decade (with the possible, though unlikely, exception of Iraq). The clock on this has been ticking for some time, and some of the moves toward increasing renewable energy sources (though motivated by a different driver) have helped mitigate some of the problem, but sadly not enough.

James Stafford:Can the shale boom be replicated in Europe?

Dave Summers: The technology for developing the hydrocarbon volumes in tight shales and sands is now becoming well defined, and can thus be transferred to Europe. It will likely make that transition fairly quickly. That’s why some countries have American partners in their development. However, the environmental movement that is strongly against the technology is more entrenched, and has more political clout in Europe, so this may slow the transfer.

At the same time, though there are significant volumes of shale, it is only after wells have been drilled and fracked that one can get an estimate as to whether or not the resource can be turned into a reserve. This information is still a bit sparse, and it makes it difficult to be definitive at this time.

James Stafford:Is the Keystone XL pipeline vital to the US quest for energy independence?

Dave Summers: The pipeline is something that is a convenience in getting more oil from Canada into U.S. refineries. There are other steps (pipelines now flowing backwards for example) that are being taken to deal with the situation. As long as the sole export market for the oil is into the United States, Canada has to take the price that it is offered for the oil, or not sell it. Should a second sales path (such as a pipeline to the coast) allow significant sales to other customers (say China) then the price will likely go up, and supplies to the US will get more expensive, and potentially smaller.

James Stafford:What happens if Keystone isn’t approved – is there a plan B?

Dave Summers: On whose part? The Canadians will run a pipeline to the coast and make more money over time. In the short term, the US will be able to balance any shortfalls with domestic production, but in about three years as that starts to fall off then life might get more difficult. It takes a long time to develop a new resource.

James Stafford:How much of a role will fracking play in US efforts to reduce carbon emissions?

Dave Summers: Grin, well that is a little bit of a loaded question. Any drop in carbon dioxide levels that will come from changing from coal-fired power stations to gas-fired are not really going to be significant on a global level, and the changes are more likely be market driven, than for political reasons.

It is hard to see, basic operational costs being what they are, that the low price for natural gas can be sustained that much longer. Any slippage in the supply, however, will drive the price up and that will cause a re-equilibration of the market. How that plays out against the political considerations in the Eastern states is, as yet, anybody’s guess.

James Stafford:If energy independence for the US comes at the cost of reducing carbon emissions, and vice versa, which target do you think they should aim for?

Dave Summers: The hope that hydrocarbon production from the shale reservoirs of the United States will lead to energy independence has about a couple of years of life yet before it is shown to be the unrealistic hype that it is.

The continuing rise in energy costs, both here and in Europe, is likely to continue to sap any strong drive toward growth and a rapid recovery from the events of 2008. This cost factor is not getting the recognition that it should, and this unrelenting drain on the global economies does not have an easy resolution. The quick fixes anticipated from investment in renewable energy has not been found to really help that much, and while every little bit helps, there are no magic solutions on the horizon that will help in the intermediate term and sooner.

And after a certain number of cold winters it becomes harder to convince the general populace that global warming remains a critical problem.

James Stafford:Do you think the coal industry’s days are numbered?

Dave Summers: Ultimately no, but in the short term there will be a reduction in demand for coal in Europe and the United States. But in the longer term there is still no viable replacement fuel that will meet the needs of the growing power markets in places such as China, India and most of Asia and Africa.

As the costs for imported fuels rise, the need to develop indigenous resources will become more vital, while the selection of the cheapest available import to sustain the competitiveness of domestic industries will likely surmount the pressures for change.

James Stafford:Many claim that oil consumption in the US will continue to soar to record levels, yet due to the fast rate of decline in production from fracking wells compared to traditional wells this seems unlikely. What do you predict will be the maximum oil production that the US could achieve?

Dave Summers: It is difficult to foresee where all the additional oil that will be needed to meet the projection of sustained growth in supply is likely to come from. Increasing production depends on finding enough people with enough money to fund the drilling costs, and without sustained successful investment, after a while the pool of likely investors shrinks.

Again I don’t see the current trends being sustained for more than a couple of years, for that reason. It also requires good potential sites for drilling, and those are becoming smaller and harder to identify.